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Client, age 40, withdrew all of the money ($45,000) from his IRA.....The entire amount is taxable and additional penalty. Client now owes IRS $15,000 Of course, he did not save any of the $45,000 to put towards the amount due....he used the funds to pay down credit card debt...and to by a new Pontiac G-6 Client is in shock as he was expecting the same $1,700 refund that he got last year....Wants me to fix the problem......I can't fix stupid.

I dealt with my first one of this season yesterday: "Yeah, but they held the tax out to cover the penalty, so you shouldn't put it on there." Aaugh! It finally dawned on me yesterday that I will never be able to get through to the people that withdraw retirement early. Cause there's a reason they're withdrawing their retirement early, you know? I feel alot better now that I have completely given up on that one.

>>principal residence<< For cancellation of debt, the term has the same meaning as in Section 121, two out of five years. However, in many states purchase loans are non-recourse. If this is a non-recourse loan, he can't use "cancellation of debt for principal residence" because technically he doesn't have any COD, just a loss on sale. In a broader context, since he can afford to honor his commitments why does he want to stick it to the bank that helped him out? No wonder our economy is a mess!